We start this week on a positive note with Asian shares rising this morning following record highs of US stock market and a policy easing in China. The focus this week will be on US CPI data on Tuesday ahead of Jerome Powell’s testimony on Wednesday, where the markets will be looking for signs of any talk of early tapering. We also get CPI data from a number of European countries. US Retail Sales and University of Michigan Survey are due to be published on Friday. The earnings season kicks off with JP Morgan, Citigroup and Wells Fargo among reporting. China releases figures this week on economic growth, trade, retail sales and industrial output.
Major US stock benchmarks booked a third straight week of gains to end Friday at all-time highs. Dow Jones rose 1.3%, S&P500 climbed 1.1% and Nasdaq added 1%. The stock market staged an impressive comeback after equities slumped on Thursday on worries of global growth outlook as some countries struggle with the coronavirus pandemic. After falling below 1.3% the 10-year treasuries edged back up on Friday rising to 1.354%. US Dollar is up this morning with DXY trading at around 92.15. Investor focus turned back now to US inflation and when the country’s Central Bank will start tightening its monetary policy, ahead of Tuesday’s release of CPI for June and Powell’s testimony on Wednesday.
The major European indices closed last week with sharp gains, with DAX up 1.7%, CAC 40 gaining over 2% and FTSE 100 up 1.3%, as Wall Street’s strong advance and China policy easing improved the sentiment. ECB Christine Lagarde said on Sunday that ECB will update its guidance on monetary stimulus at its meeting next week and has indicated that fresh policy might be introduced in 2022 to replace the current bond-buying program. This week a number of European countries release CPI data. ECB can now potentially allow CPI climb higher than 2%, as they have changed its stance on inflation last week. This Monday Europe has opened on a mixed note with FTSE 100 down 0.8%, CAC 40 down 0.5% and DAX 0.8% lower. EURUSD eased towards 1.1850 as it may be suffering from the divergence in monetary policy.
Asian stocks rallied this Monday with MSCI’s broadest index of Asia-Pacific shares up 0.7%. Japan’s Nikkei bounced 2.2%, while South Korea added 0.9%. In Australia ASX 200 rose 0.9%. Australia reported its biggest daily rise in COVID-19 cases this year due to the spread of the Delta variant. China’s Shanghai Composite was up 1.13%. Investors are awaiting a few Chinese data publications, as they continue digesting a surprise easing in monetary policy last week by PBOC. Expectations around China outlook have worsened due to some disappointing data releases recently, but annual growth is still expected to be above 0.8%.
Oil prices are lower this Monday amid uncertainty caused by rising global COVID-19 cases and the lack of the agreement at the last meeting of the OPEC and their allies. US Crude was lower by 0.2% at $74.39 a barrel, while Brent fell 0.2% to $75.37. Prices remain at elevated levels with US reporting drops in the nation’s crude inventories and rising gasoline demand. Elsewhere, gold futures fell 0.5% to $1,800.95/oz. Cryptocurrencies mostly unchanged with bitcoin trading at around $34, 267.